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Oregonians this year will see a seismic shift in how public higher education operates across the state, bringing changes that I hope will help our students succeed and allow our economy to grow.

Gov. John Kitzhaber and the Legislature have restructured the university system to give the three flagship universities — Portland State, Oregon State, and the University of Oregon — more independence and create a system of accountability that will push all seven public universities to work more effectively with the state’s 17 community colleges and 1,330 public schools.

What does this mean for Oregonians?

•PSU, OSU, and UO will no longer be managed by the State Board of Higher Education, which by design had to divide its attention among all seven state universities. The three flagships have new governing boards made up of business and community leaders, faculty and students. At PSU, this means our new board of trustees will be able to focus solely on our urban mission, such as increasing financial aid for students and supporting innovations that drive economic development.

•Tuition at all public universities will not increase this year and will remain frozen during the 2014-15 academic year thanks to additional funding from the Legislature. This year is the first time since 2001 that tuition has not increased at Oregon universities. In future years, a new state law will limit tuition increases to no more than 5% a year.

•Oregon’s four regional universities – Western, Eastern, Southern and the Oregon Institute of Technology – will remain under the State Board of Higher Education for now. A new Higher Education Coordinating Council will oversee universities and community colleges, and the new Oregon Education Investment Board will guide all public education, from preschool to post-graduate. This restructuring is driven by the governor’s vision for more coordination and collaboration across Oregon education’s system. The goal is for 40% of Oregonians to attain bachelor’s degrees, 40% associate’s degrees or post-secondary training and 20% high school diplomas.

These changes are promising, particularly for the private sector which needs an increasingly skilled workforce. Unfortunately, the changes will not solve the most pressing problem in higher education: the lack of stable and adequate funding.

Despite recent increases, Oregon still ranks near the bottom in state support for universities. At the Oregon Business Summit in December, I was struck by repeated comments from business executives and policy makers who spoke passionately about the critical importance of education to our future. Yet, the gulf between our ambition and the reality of our funding continues to widen.

At PSU, we will have to cut $15 million from the next academic year’s budget — that’s 5% of our operating budget. However, the cuts are necessary because state funding now contributes less than 14% of our operations. This disinvestment is part of a long-term trend that has shifted the cost of college from the state to the student. At the same time, our costs have increased because of PERS pension benefits, rising health insurance costs and increased costs in supplies and services. That leaves us with a $15 million shortfall. We are instituting a two-year pay freeze for most administrators, eliminating subsidies for football and requiring the team to be self-supporting, therefore postponing or reducing capital projects that are necessary to keep pace with growth while making other cuts. It’s been challenging to make these difficult decisions, but they need to be made to put PSU on a sustainable fiscal path.

Over the long term, however, we are hopeful that the structural changes in higher education will help us move forward. For instance, our new 15-member board appointed by the governor and confirmed by the state Senate is a diverse and impressive group. The board, which officially takes over July 1, includes respected business leaders and entrepreneurs such as Pete Nickerson, Gale Castillo, Sho Dozono, Fariborz Maseeh, Rick Miller, Christine Vernier, Peter Stott and others.

While PSU’s day-to-day operations will continue to be run by the president and top administrators, the new board will set academic and budget priorities and decide tuition costs, new degrees and capital projects. We will benefit from their wide array of experience and knowledge. Students will be the ultimate winners under the new system because board members will emphasize student success initiatives, financial aid, scholarships and private philanthropy. We will also work with the Legislature to increase university funding in the 2015 session and are exploring other potential revenue sources.

2014 is not just the beginning of a new chapter for PSU, it marks a new era for higher education across the state. I urge business leaders to get involved in our efforts to strive for excellence at Oregon’s universities.

Wim Wiewel is president of Portland State University. He is one of three university administrators who will write a quarterly column on higher education for Oregon Business in 2014. The two other contributors are Mary Spilde, president of Lane Community College, and Debra Ringold, Dean of the Atkinson Graduate School of Management at Willamette University.